Analysis: Trading the Anticipated Top in Gold
To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.
The next couple of trading days look important for gold from a cyclical perspective. Several medium and short-term studies suggest it is prone to a turn of some sort during this timeframe. With strong resistance just overhead at 1301/16 (50% retracement of the 2008 to 2011 advance and 4th square root progression of year-to-date low) we favor a top. Given the corrective nature of the advance from the June 28th low the anticipated turn should provide a good opportunity to align with the broader downtrend in place since October. Weakness below this week’s low near 1270 will confirm that a top is in place, but a close under a key Gann support level at 1248 is really required to signal that a more meaningful decline is underway. Strength in XAU/USD beyond 1316 after Tuesday would invalidate the cycle turn window and shift our focus higher.
XAU/USDDaily Chart: July 19, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk Next Week:
Source: DailyFX Calendar
LEVELS TO WATCH
Resistance: 1316 (Gann), 1347 (Fibonacci)
Support: 1270 (Weekly low), 1248 (Gann)
STRATEGY – Sell XAU/USD at 1312
Stop: 1-day close above 1316
Target 1: 1248
Target 2: 1218
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.
To contact Kristian, e-mail email@example.com. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.